Substance over form in property transfers: artificial splitting cannot defeat Chapter XX-C compliance and prosecution requirements.

For Chapter XX-C, the Court treats the real substance of the transfer as controlling and rejects artificial splitting of a single property into separate sale deeds to avoid statutory thresholds and the Form 37-I no-objection mechanism. It also states that a complaint under section 276AB is maintainable when filed by a member of the Appropriate Authority acting under express authorisation, and that prosecution is not invalid for want of a prior show-cause notice or for not impleading the registering authority, because those requirements do not govern criminal proceedings for breach of section 269UC.

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Issues: (i) Whether two sale deeds executed for undivided shares in a single unit property could be treated as one transfer so as to attract Chapter XX-C and the obligations under sections 269UC and 269UL(2) of the Income-tax Act, 1961; (ii) Whether a complaint under section 276AB of the Income-tax Act, 1961 was maintainable when filed by one member of the Appropriate Authority pursuant to authorization; (iii) Whether the prosecution was bad for want of a prior show-cause notice or for not arraying the registering authority as an accused.

Issue (i): Whether two sale deeds executed for undivided shares in a single unit property could be treated as one transfer so as to attract Chapter XX-C and the obligations under sections 269UC and 269UL(2) of the Income-tax Act, 1961.

Analysis: The statutory scheme in section 269UA treats the subject-matter of transfer in a real and substantive manner, having regard to the object of Chapter XX-C. The property in question was found to be a single unit, and the two sale deeds merely divided that unit into two undivided halves with the apparent consideration split so as to keep each transaction below the threshold. Such artificial splitting could not defeat the statutory restrictions on transfer or the requirement of filing Form 37-I and obtaining the no-objection mechanism.

Conclusion: The transfer attracted Chapter XX-C, and the challenge to the prosecution on this ground failed.

Issue (ii): Whether a complaint under section 276AB of the Income-tax Act, 1961 was maintainable when filed by one member of the Appropriate Authority pursuant to authorization.

Analysis: The sanction order had expressly authorized the First Member of the Appropriate Authority to file the complaint. A complaint filed on the authority of the competent body satisfies the statutory requirement, and there is no rule that the entire authority must physically present the complaint petition.

Conclusion: The complaint was maintainable.

Issue (iii): Whether the prosecution was bad for want of a prior show-cause notice or for not arraying the registering authority as an accused.

Analysis: The penal provisions did not require a prior show-cause notice before launching prosecution under section 276AB. Any opportunity of hearing contemplated in section 269UD(1A) relates to the pre-emptive purchase process, not to criminal prosecution. The Act also did not provide for prosecuting the registering authority for the owners' violation of section 269UC.

Conclusion: The prosecution was not vitiated on either ground.

Final Conclusion: The challenge to the criminal proceedings was rejected, and the prosecution was permitted to continue.

Ratio Decidendi: For the purposes of Chapter XX-C, the Court will look to the real substance of the transfer and not an artificial fragmentation of a single property into separate sale deeds to avoid statutory thresholds and compliance obligations.

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